Company to build new cross-deck distribution facility and add stores, expects single-digit sales growth this year despite economic slump

By LIDA ESTELA RUAÑO

Wal-Mart Puerto Rico Inc., which comprises both Sam's Club and Wal-Mart stores, expects to double its $400 million investment over the next five years in a very aggressive plan for Puerto Rico and, possibly, the Caribbean.

Federico Gonzalez Denton, the local subsidiarys corporate affairs director, said sales are good and a strong Christmas season is anticipated. Annual sales growth should be in the single digits.

Sales have held up because clients look for good prices and value, the specialty of both stores, Gonzalez Denton said.

"Sales of household appliances, especially entertainment equipment, and food are increasing because people are spending more time at home watching television and eating out less. On the other hand, travel gear is down," he said.

To help ensure strong Christmas sales, the company will kick off the season with a blitz sale the day after Thanksgiving. Numerous big-ticket household appliances will be offered at below-bargain-basement prices. Both stores are already being stocked with Christmas items. And the popular Christmas catalog introduced last year will be at all stores by mid-October.

Gonzalez Denton said that although the company has maintained annual double-digit sales growth during its eight years of operations in Puerto Rico, it is only realistic to anticipate single-digit growth this year.

Gonzalez Denton said among the companys top priorities is building a cross-deck facility to substitute its 65,000-square-foot Cataño facility that services all 17 local stores. The projects site has not been chosen but the 120,000-square-foot building is expected to cost between $15 million and $20 million.

The concept is not just a warehouse. As conceived, suppliers will bring merchandise to one side of the building. A quick turnaround will then be achieved as personnel move the merchandise to the other side and load it onto trucks for delivery.

As the company decides on locations islandwide, it must also determine if it will open another supercentera mix of supermarket and Wal-Martlike the one in Cayey. Stores average between 115,000 and 125,000 square feet, while the supercenter occupies 181,000 square feet. The only definite site is for a Sam's Club on PR-2 in Hatillo, slated to open in mid 2002.

"We see Puerto Rico as the natural center of operations for a Caribbean expansion. But there are many variables to consider, such as where to start," Gonzalez Denton said, adding that Mexico, where Wal-Mart is strong, may want to lead the Caribbean expansion. "Our focus in Puerto Rico is our local operation and I don't think it will be likely that we spearhead a move to the Caribbean within the next five years when we have ongoing expansion here."

Wal-Mart is very proud to purchase 50% of its merchandise in Puerto Rico. "We also want to increase our private label contracts so that more local manufacturers and distributors supply us with their goods," Gonzalez Denton said.

Starting with the Cayey supercenter, the company is having its Great Value private-label milk supplied by Industria Lechera, bread by Pan Pepin, rice by Pan Am grain, and paint by Lanco. Sam's only has Holsum supply its bread under the private label Member's Mark, "but we want beans, water, juices, and other products made locally for our label."

Gonzalez Denton said the company is not anticipating any new concessionaires at its stores, which already have Mc Donalds in Wal-Mart, as well as Subway, Banco Popular, and Banco Santander in Sam's.